China’s corruption clampdown has hit sales at French liquor
group Pernod Ricard but there is still optimism in the long term, according to
John O’Sullivan, Pernod Ricard Asia Travel Retail’s marketing director.
Speaking about sales to the Chinese, who were traditionally
big buyers of super-premium duty-free liquor, O’Sullivan admitted times had
been tough. “Asia has been more difficult in the past year,” he said. “There’s
been an undoubted slowdown, but business is still positive. There’s still a lot
of potential for travel in the region, and in the next ten years, over the long
term, it will be good. High net worth individuals are already travelling and
are becoming more discerning. The clampdown has been an important factor, but
they are still buying high-end - they are just more demanding. There are more
middle-class people travelling so we’re still optimistic.”
Elsewhere in Asia, the travel-retail sector is outperforming
the domestic market in South Korea. “Korea is a big whisky market but vodka is
fast emerging. There has been a slowdown in whisky consumption in Korea but our
Absolut vodka brand is growing,” O’Sullivan said.
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| Absolut Warhol is the latest addition to Pernod Ricard's growing vodka range |
Pernod Ricard’s biggest markets are the US, followed by
China, then travel retail. He described the latter channel as a “profitable
showcase”.
Premiumisation is still the big focus for the French drinks
group, but O’Sullivan noted that there was now a new context to the word “premiumisation”
in light of the Chinese anti-graft campaign. He gave the example of
Ballantine’s 12yo expression versus the standard product Ballantine’s Finest.
Whereas before, Chinese travellers would not hesitate to buy 12yo, they may now
buy Finest. “We’ve got to make sure we’ve got the right portfolio,” he said,
noting that the trend towards purchasing entry-level products is also being
seen with Martell Cognac. Travel retail, which offers good value, also enables less
cautious consumers to trade up.
Big brand activations in Asia
Turning to business highlights over the past year,
O’Sullivan pointed to a number of big activations centring on six or seven
brands in Asia, particularly Martell, which has been celebrating the Cognac’s
gourmet food pairing characteristics. He also listed the marketing activity
around Chivas Brothers’ Blend, Royal Salute’s polo connections, alongside
Ballantine’s Signature Distillery Editions and Glenlivet 16yo Nadurra.
Absolut recently launched a new limited edition called
Absolut Warhol, which made its debut in travel-retail stores in November
following its domestic market unveiling across the US and Europe. The new pop art-inspired
product is also featured in the Absolut store at Kuala Lumpur International
Airport. Travel retailers are also focusing on Absolut Karnival, described by
O’Sullivan as a fun product supported by Brazilian-themed activations.
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| Martell Cognac celebrates its 300th anniversary in 2015 |
Turning to 2015, O’Sullivan said that Pernod Ricard has a
number of major developments in the pipeline, including Martell’s 300th
anniversary celebrations which will see a lot of limited editions. “We have a
full year of celebrations for Martell – it’s a big year as it’s the oldest of
the major Cognac houses.”
In addition, Chivas Extra, a sherry aged whisky in red and
gold livery, is being launched on the domestic market, positioned above 12yo
but below 18yo, retailing at $50-60. Lastly, O’Sullivan said there would be
“new news” for the Absolut brand next year, without divulging details.
